American Community Newspapers (ACN) is the latest newspaper chain to seek bankruptcy court protection for reorganization. The company owns daily and weekly newspapers clustered around Minneapolis-St. Paul; Dallas; Columbus, OH and the Northern Virginia suburbs of Washington, DC.
“A difficult economic environment and weak advertising market have created a number of challenges for our industry and our company,” said Gene Carr, Chairman and CEO in announcing that ACN had filed a chapter 11 petition with the US Bankruptcy ?Corut for the District of Delaware. “While we have proactively managed our business by right sizing our cost structure and driving efficiencies to maximizing our cash flows our operations are not able to support our current capital structure. As a result we intend to reorganize via the 363 sale process with continuing support from our lenders which, if approved, will reduce our debt. This will place us in a better position to execute on our business plan and serve our communities. We worked with our financial advisors to explore a wide range of alternatives before making this filing, however the decision to proceed with the reorganization was determined to be the best alternative,” Carr said.
ACN’s secured creditors are providing $5 million in debtor-in-possession financing and are contemplating a “stalking horse” bid for the assets. That would set a threshold which any other bidders would have to beat to acquire the newspapers, websites and other assets.
The company last reported financial results for Q2 of 2008, when revenues fell 14.4% to $17.2 million. Its net loss increased from less than a half million dollars to over $109 million, although that included a $110 million charge for impairment of intangible assets.